SIPS Client Alert – January 2021

SIPS SIPS Newsletters

Contents:

SIPS Welcomes New Partner Chris Smith
White Paper on Trademark Protection in China
Bad Faith Registration in China
Online Enforcement of IP in China
Patent Law Revision
Copyright Law Revision
TMO / TRAD Pendency
CNIPA Action Plan
PRC Civil Code
Admissibility of Offshore Evidence Accessed through VPN
Domain Names
SIPS Publications

Photo of Chris SmithSIPS Welcomes New Partner Chris Smith

We are pleased to announce that China trademark veteran Christopher Smith has joined SIPS as a partner effective January 1, 2021.

Chris (whose CV is available here) has decades of experience in trademark prosecution in China.

White Paper on Trademark Protection in China

As part of its efforts to support policy work by our clients, in November 2020 SIPS issued a white paper summarizing the main barriers to trademark protection in the PRC.

An English version of the paper is available here, and a Chinese translation will be released shortly.

Bad Faith Registration in China

In January 2020 SIPS published a report on recent developments in the legal and practical terrain regarding bad faith trademark registration in China. Click here for access.

Among other things, the report covers:

  • implementation of 2019 revisions to the PRC Trademark Law relating to bad faith filings;
  • best practices that have emerged since amendment of the law, such as the filing of interference letters against pending applications; and
  • recent administrative fines imposed on bad faith filers as well as recent civil decisions in cases involving the well-known mark QIAO DAN – the Chinese name of basketball icon Michael Jordan.

Over the last three years, SIPS partner Joe Simone has participated in INTA’s Bad Faith Trademark Registration Task Force, which conducted a global survey of best practices and drafted a Board Resolution on the issue that was formally adopted by INTA in November 2020.  See here for access to the resolution.

SIPS remains active in association work encouraging Chinese authorities to draw from the best practices recommended by INTA.

Online Enforcement of IP in China

Over the last year, Chinese authorities have issued a raft of new regulations, policy directives and judicial interpretations intended to strengthen respect for IP and offer greater protection for consumers. SIPS is currently preparing a report summarizing and analyzing these developments, and comparing them with similar developments in other major countries, including the US, EU and India.

In the meantime, SIPS has prepared translations of the more interesting regulations issued by Chinese authorities, including a Supreme People’s Court (SPC) judicial interpretation clarifying the obligations of online trade platforms and notices issued by the State Administration for Market Regulation (SAMR) regarding consumer protection, “live sales” events, voluntary standards for online platforms in establishing their IP protection systems, and other matters.

Patent Law Revision  [TO REVISE]

The PRC Patent Law was amended in 2020 with the changes entering into effect on June 1, 2021.

Among other things, the revisions extend the duration of protection for design patents and utility models to 15 years, up from the prior 10-year period.  It remains unclear at present whether the extension will apply retroactively to already-registered patents.

The revised law also provides the following:

  • Higher damages for infringement;
  • Where the infringer refuses to provide records of prior transactions, the court is permitted to accept the plaintiff patent owner’s assertions and evidence in support of damages claims;
  • Allowance of design patents covering portions of products. By comparison, under the prior law, patents could only be granted for full product designs;
  • New mechanism for patent term compensation. Where an invention is granted after four years from the date of application and three years after the date of the request for substantive examination, the applicant is entitled to request compensation due to the “unreasonable” delay, except where the applicant itself has caused the delay;
  • A new mechanism for open licenses. Where the patentee declares and records its intention to the administrative department for patents under the State Council to open license its patents and specifies the payment of a licensing fee, the administrative department is required to announce the same and implement the open license;
  • New conditions for pre-action injunctions relating to acts impeding the realization of patent rights;
  • Ability to join together separate cases against multiple defendants where the same patent is at issue, upon the request of the patent owner or interested parties.

Draft implementing rules to the revised law were recently published for public comment and are expected to be promulgated before the new law enters into effect.

The PRC Copyright Law was amended on November 11, 2020, with the changes scheduled to enter into effect on June 1, 2021.

Among the more significant changes introduced are the following:

  • The introduction of punitive damages of up to 500% of awarded damages for more serious violations and an increase in the maximum level of statutory damages to RMB 5 million (about US$773,000), increased from only RMB500,000 in the prior law.
  • Expansion of the definition of “works” that can be protected under the law. Specifically, the former catch-all provision “other works as provided in laws and administrative regulations” [法律、行政法规规定的其他作品] has been replaced with the phrase “any original intellectual product in fields such as literature, arts, and sciences that may be expressed in certain forms” [符合作品特征的其他智力成果].
  • Replacement of the “cinematographic works” [电影作品] with a new category of protected work “audiovisual works” [视听作品], intended to offer a clearer basis for protecting new forms of expression such as live sports programs, online streaming of video games, video shorts, etc.
  • The amendment of the law’s fair use provisions to accommodate a wider range of circumstances. Specifically, the definition of fair use has been made non-exhaustive and introduces a three-step test based upon the provisions of Article 9 of the Berne Convention and Article 13 of the TRIPS Agreement, i.e., fair use will be supported where the user:
    • provides the name of the author and the title of the work;
    • the copyright owner’s rights to normal exploitation of the work is not affected; and
    • unauthorized use of the work does not otherwise unreasonably prejudice the legitimate interests of the copyright owner.
  •  More explicit protections against parties that produce, distribute, or provide related services to anyone providing anti-circumvention measures.
TMO / TRAD Pendency

The PRC Trademark Office and Trademark Review and Adjudication Department (TRAD), which handles appeals of TMO decisions as well as invalidations, have continued to accelerate the timelines for review and issuance of decisions of applications (now four to five months), renewals (three months) and a range of other matters.  See here for SIPS’ chart setting out current pendency periods for most types of registry matters.

CNIPA Action Plan [TO REVISE]

In April 2020, the China National IP Administration (CNIPA) issued a comprehensive list of major legislative, enforcement and research initiatives that are currently in progress and intended for completion within the next three years.

SIPS has prepared a memorandum, available [here], summarizing the initiatives of most relevance to trademark owners as well as the status of their implementation.

PRC Civil Code

The long-awaited PRC Civil Code entered into effect on January 1, 2021. The Code is the most extensive and significant legislation in China’s history, and it replace several existing laws (including the General Principles of the Civil Law of 1997 and the PRC Contract Law.

The new Civil Code strengthens the protection of IP rights primarily by sanctioning the use of, as well as lowering the threshold for, punitive damages as a means of adequately compensating victims of infringement and generating greater deterrence.

The remaining IP provisions set out in the new Civil Code are also generally in favor of IP rights holders.

SIPS has issued a report summarizing the key provisions of the revised Civil Code, available here.

Admissibility of Offshore Evidence Accessed through VPN

In December 2020 a Guangzhou court issued a decision in December 2020 in a copyright dispute involving two Chinese litigants addressing the admissibility of online evidence sourced from within China through the use of a Virtual Private Network (“VPN”).  See SIPS article on this decision here.

In short, while Chinese regulations prohibit the use of VPNs to access foreign content and provide for fines against violators, the court concluded that such evidence should not be excluded from consideration.

The decision is not binding on future courts under China’s civil law system, and thus reliance on such evidence remains risky.  As such, consideration should be given instead to downloading relevant content in Hong Kong or Macau (where the Great Firewall of China does not yet exist) before a China-Appointed Attesting Officer in these regions.

Domain Names

SIPS partner, Joe Simone, has been a WIPO arbitrator for URDP and CN-DRP (.cn) domain name disputes and has issued over 70 decisions since 2019.  In late 2020, he was also appointed and as an arbitrator by the Hong Kong International Arbitration Centre to handle UDRP and CN-DRP cases.

SIPS Publications

SIPS regularly publishes reports on the latest developments in IP law in China together with translations of new laws, regulations and judicial interpretations in the Knowledge section of its website.

Below are some of our latest additions.

Reports:

Translations: